We’ve recently launched a subscription based advice service called My Pension Roadmap. It’s aimed at the members of our group pension plans who want to know what it’s all worth and when they’ll be able to retire. We’ve extended it to all of our clients recently. You can read more about it here.

There are some really scary statistics being banded around in the media about exactly when we’ll all be able to stop working. Of course that’s if we even want to! We mentioned the Oddfellows survey in our earlier blog article here. Not only do people have very little idea of what kind of savings they need – they are doing nothing about it.

But don’t take our word for it. Let us give you a real live example of My Pension Roadmap in practice. We’ve changed some of the personal details to protect the clients’ privacy.

Jim and Donna are both in their 50’s. They own their own home and the kids have all grown up and left home. Jim works in a factory and Donna is a nurse in the NHS. Apart from a short break to bring up kids Donna has always worked full-time. Jim has worked for several companies but has always been in the pension scheme. The couple have a modest standard of living and have always saved what they can.

The first stage of My Pension Roadmap is to sit down with Jim and Donna at the Discovery Meeting. This is when we really get to grips with what Jim and Donna’s ambitions are for their later years. For example we really drill down into issues like where they want to live, what they want to do with their time and what legacy they’d like to leave. We look at how they feel about taking risks with the money they’ve worked so hard to build up. We’ll also try to help Jim and Donna understand he risk v reward conundrum. The Discovery Meeting is part explanation, part education and mostly listening.

At our Discovery Meeting it became clear that Jim was becoming weary after a lifetime of work and Donna was really looking forward to reaching her retirement date soon. They both wanted to spend more time with their grandchildren. As avid caravanners they wanted to set off on a great adventure around Europe for a few months and wanted a new super duper caravan for this road trip.

We looked at the state pensions that Jim and Donna had built up and Donna’s NHS Pension. We also had details of Jim’s personal pension plans. The couple also have some savings.

Jim doesn’t think he’ll be able to retire until his state pensions kicks in when he’s 65. He doesn’t have a clear idea of how much his pensions are worth. The pensions that him and Donna have all be one payable at different dates and Jim admits he’s confused. Ideally he’d like to retire when Donna gets to 60 in a couple of years.

After the meeting we went away to start collecting all the info we needed to be able to report back to Jim and Donna. My Pension Roadmap is designed to distill all the technical stuff down into something really simple and easy to understand. At the heart of My Pension Roadmap is your Retirement Cashflow. It shows you the estimated money in and money out and help you see whether you will achieve your goals.

Jim and Donna are over the moon when we tell them at our next meeting that they can both afford to stop working and do the things they want to in a little less than 18 months. Jim said it was like a weight lifted off his shoulders and that he felt invigorated.

We are now in the process of implementing the changes that we recommended that’ll help Jim and Donna stand the best chance of meeting their goals. We’re moving Jim’s pensions into less volatile funds. We’re looking at getting updated State Pension Forecasts. Finally we’re moving into the discussion stage and looking at all the ways that we can turn Jim’s pension savings into an income for him.

Finally, we’ve transferred Jim’s pension plans into one pot. This means that not only will he pay less in charges but he can also pay his My Pension Roadmap subscription from his pension in product charges. And he’s still better off.

We’re really excited about My Pension Roadmap and we hope that people like Jim and Donna become it’s biggest ambassadors.

If you’d like to arrange a free initial discussion about My Pension Roadmap please contact us here.

As the first wave of baby boomers turn 65, the number of people in the UK approaching retirement is growing at a pace never seen in our history.

However, the problem is, for many of them, their bank accounts aren’t.

The crush of the economic downturn – which saw many people lose some of their life savings – has forced some people to work several more years than they originally hoped for when they were looking at their retirement plans.

Others simply haven’t saved enough of a nest egg over the decades to live comfortably in what should be the best years of their lives.

Just under half (45%) of employees in the UK don’t have a pension plan. The Office for National Statistics latest Pension Trends publication states that in 2007 about 9 million people were members of a company pension scheme and about 7 million were paying into a personal pension plan. The UK working population hovers around the 29 million mark. So that means only 55% are using a pension plan to save for their retirement.

A Financial Tsunami?

Baby boomers may be reaching their retirement in waves, but a financial tsunami could be in their wake.

The survey – which was conducted among 1,200 Oddfellows members aged between 55 and 65 – found that on average, £25,000 per year was considered enough to provide for a reasonable standard of living.

Nearly 20 per cent of those yet to retire either didn’t know or didn’t answer when asked how much they would need to save to enjoy the post-retirement lifestyle they want.

More worrying was the fact that most of those who said they did know actually underestimated the figure. The average answer was £380,000 when it’s closer to £500,000. According to the Pensions Policy Institute the average size of pension fund used to buy an annuity was £24,330. Unless you have a company pension to bridge the gap, or have accumulated 20 of these “”average “pension plans, it’s likely you’ll miss the target.

Clearly if these baby boomers want to maintain the same standard of living, it’s going to be difficult. It’s not an immediate problem, but it’s a problem that’s going to creep up on us in the future.

One of the effects of the prolonged economic slump is that many workers aren’t retiring at 65 and are now working for several years more than originally planned just to comfortably exist. With the removal of the Default Retirement Age making it more difficult for employers to justify retiring an employee some people who are currently working may never retire.

So what’s the answer?

Is there one? In my previous post I wrote about my concern that we were sleepwalking towards a very poor old age.

The government is taking some action by forcing us to save for retirement with automatic enrolment into workplace pensions. However, you’re going to have to go some to build up £500,000 of a pot by the time you retire.

Many people have grown up over the last few decades with no real saving mentality or habit. Some are even largely excluded from financial products – sometimes voluntarily. Brian Pomeroy – who is the Chairman of the Financial Inclusion Taskforce – said recently:

“The single thing which is most likely to make someone who is really distrustful of the banks open a bank account is wanting a Sky TV contract.”

At the other end of the scale the boom in house prices over the last twenty years has lulled people into seeing the equity in their house as a means of financing their retirement. However, in words of one campaigner for pensioner rights “You can’t eat the front doorstep”.

Realistically there is no magic bullet. As a nation I believe that we have to:

Educate our children about the need to save from an early age.

Get finance into the school curriculum.

Realise that the government isn’t going to support us when we retire.

Make financial products simpler and more straightforward.

Make our pension system easier to understand for the man in the street.

Plan ahead. Having a financial roadmap helps us navigate life’s ups and downs.

Most of all it’s really simple – we’ve all got to save long and save hard for our future.

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